Chapter 4, Problem 4.7EYCT

(a)

To determine

Financial Statements: The statement prepared for the specific period which comprises the financial information of the organization. It includes a statement of income which shows the profitability of the business, balance sheet which shows the financial position in the terms of assets, liabilities, and capital, and cash flow statement which represents the cash flows for the accounting period.

Ethics

Ethics is derived from the Ancient Greek word ethicos which mean ‘Custom’. These are the values, principles, and philosophy which are to be followed by every person. Ethics in Action means a person should do only those activities which are ethically right in a specific situation.

The stakeholders of the organization which are affected by the misstatement in the financial statement.

(b)

To determine

The ethical issues raised in the situation of misstated financial statements.

(c)

To determine

To provide: The decision to be taken by the controller in the given situation.